THE cost of the proposed Kings Dock arena and conference centre has risen by £40m to reach £140m.

THE cost of the proposed Kings Dock arena and conference centre has risen by #40m to reach #140m.

The news comes just ten days after spiralling costs were blamed for the cancellation of the Fourth Grace scheme at Liverpool's Pier Head. Architect Will Alsop's controversial Cloud design was to be built next to the Port of Liverpool Building.

It also emerged last night that a decision was taken in early July to find part of the increased cost of building the 10,000-seat arena and conference facility at Kings Dock from European grant money earmarked for the Fourth Grace.

At that stage, #12m of Merseyside's Brussels funded Objective 1 cash was switched to the arena scheme. Objective 1 is now expected to contribute #47m to the arena against an original budget of #35m.

That money was part of a #65m pot of cash that was meant to be used to regenerate Liverpool's waterfront, including Kings Dock, the Fourth Grace and the cruise terminal. However, with the developers of the Fourth Grace asking for #43m of Objective 1 grant, the #65m was never going to be enough to pay for all of the schemes.

It had been hoped that future savings from other parts of the #900m, seven-year Objective 1 programme could be found to permit both the Kings Dock arena and the Fourth Grace, (right), to proceed. But in the last few weeks, Government Office North West, which manages the Objective 1 programme, has concluded it would not be possible to find sufficient savings. It appears that the Fourth Grace was sacrificed for the sake of the Kings Dock scheme.

The rising cost of the Kings Dock arena and conference centre is expected to be confirmed in an announcement by Government Office today. The increased estimate results from more detailed costings compiled by the scheme's quantity surveyors.

Last night Liverpool City Council leader Mike Storey pledged that the Kings Dock arena would not be ditched, despite the rising costs.

Cllr Storey said: "There is no going back on this. It must and will happen.

"It is vital for the city that the arena, with seating for up to 10,000, is delivered in time for Capital of Culture year in 2008. I know that all the partners involved are committed to making sure that happens.

"The project enjoys widespread support and we are determined to ensure it is delivered for the people of Liverpool."

The news that funding has been switched between the two projects is bound to anger the Fourth Grace developers, Neptune Developments and Countryside, who are reported to be considering legal action to recover around #4m of costs run up in preparing the scheme.

English Partnerships, the North West Development Agency and Liverpool City Council, which will operate it once completed, have committed the rest of the #140m funding for the arena.

The arena scheme is part of a wider 15-year programme to regenerate Kings Dock, which is currently used as a car park next to the Albert Dock. It is expected that most of the site will be used for 1,800 flats.

The latest arena scheme replaces a proposal scrapped last year for a 55,000-seat football stadium and concert venue that also failed to find sufficient funding.